To the reported anger of Chancellor Angela Merkel, US Ambassador to Germany Mr Richard Grenell earlier this week invited the chief executives of Daimler, Mr Dieter Zetsche; BMW, Mr Harald Krüger; and Volkswagen, Mr Herbert Diess, for a secret meeting to offer them, directly from the White House, a solution to the tariff threat of the US President.

Mr. Grenell reportedly told the German car executives that Washington would agree to solve an auto trade dispute with Brussels if both the European Union and the United States abolished their tariffs on each other's cars completely.

As it currently stands, the EU, which administers trade policy for Germany and the rest of the bloc (but which listens to the German government as its biggest contributor) imposes a 10 percent duty on car imports from the US. In return, however, the US only has a 2.5 percent tariff on EU car imports.

One of the options being considered between governments is for full abolition of trade tariffs for the major car markets. Under such a multilateral agreement, they could agree to abolish their car duties between the US, the EU, Japan and South Korea for example.

Of course, this would then leave out China, which is currently in a full-out trade war with the US and would want to participate in an abolition of tariffs for its cars in Europe as well.

<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Handelsblatt reporting that US Ambassador to Germany Richard Grenell has told German auto makers that Trump would suspend threats to impose tariffs on cars imported from the EU if the EU lifted all tax on US cars so let’s see how much free trade the EU really wants…</p>&mdash; FxMacro (@fxmacro) <a href="https://twitter.com/fxmacro/status/1014849888461492224?ref_src=twsrc%5Etfw">July 5, 2018</a></blockquote>

President Donald Trump had earlier threatened the EU with import duties on cars and car parts of 20 percent, which would be hit German manufacturers very hard as they exported $ 20 billion worth of cars to the United States in 2017.